Are nonprofits required to pay taxes?
In South Dakota, nonprofit organizations are generally exempt from paying taxes. However, there are certain circumstances in which they may be required to do so. Nonprofits must pay sales and use tax on things they buy, but are exempt from paying property or income taxes. They are also sometimes required to pay certain "excise taxes," which include taxes on gasoline, alcohol, and tobacco products. In addition, South Dakota requires certain nonprofits to collect and remit sales and use taxes on the items they sell. Certain nonprofit organizations, such as those that provide services like daycare, are subject to a gross receipts tax of 2.5%. This means that for every dollar a nonprofit earns, the organization must pay 2.5 cents in taxes. Nonprofits that receive grants or contributions and use those funds to provide services in South Dakota may also be required to pay taxes on the grants and contributions. In addition, nonprofits may be required to withhold payroll taxes for employees if the employees are not considered volunteers. Overall, while nonprofit organizations are generally exempt from taxes in South Dakota, there are certain taxes they may be required to pay depending on the types of services they provide or items they sell.
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